Bill's Corner

 

November 4th, 2017

 

Harvest is over and we had a pleasant surprise.  We believed yields would be down this year because of the very hot summer without any precipitation.  It turns out the flax, safflower and mustard rooted deep enough that it lived on the deep sub moisture.  Yields on all three crops were above long term trends.

Going into the summer, our carryover stocks looked like they might be higher than normal.   Adding to the carry over, MSO had higher acreage contract for all three crops.  Our figures showed that we needed to build more storage even if the 2017 crop was smaller because of the drought.  We added 27,500 bushels in Weston and 111,500 in American Falls.  Right a the beginning of harvest we could see yields trends a lot higher than we had estimated.  That meant storage was going to be short and tight even with the new storage that was added.

 The We did not see the yields trend higher over all the production area.  Turns out that crops in eastern Montana, North Dakota, and Saskatchewan were very much by hurt by drought.  I believe sub moisture was the key.

So what does this mean for flax, safflower, and mustard supply and demand fundamentals:

·       Mustard   ----  My early predictions of  supply were very close.  Stocks to use mustard will be used to supplement the 2017 short crop.  Prices are trending up and have raise 5-7 cents per pound Canadian dollars. 

·       Safflower  ---  I believe safflower after the first of the year could be short and buyers will come to Idaho for supplies.  We have not seen this trend yet as numbers for the crop are still being realized.  Our crop in Idaho/Utah was one of the best quality wise for a good many years.

·       Flax   ---  Flax so far flax has stayed level.   Prices have inverted between North Dakota and Canada.  North Dakota had a very bad crop with Canada being down but with the acres planted supplies adequate for now.  Before harvest North Dakota pricing was below Canada and now  prices are higher in North Dakota.  Some of the news sources are expecting flax to make a bull move sometime during the marketing season, but prices are flat right now.

Mountain States Oilseeds has good quality and supplies of all three commodities.  If markets trade short in the future we are in a good position.

Keep posted as the marketing year develops.  I would say, at this point in time new crop contracts are looking more to the upside than downside.

August 25, 2017

              August is about over and mustard and flax harvest is just getting into full swing.   Among processors, wholesalers, and growers there are very big market direction questions that will be answered within 30 days or sooner,  For mustard the biggest question will be how much below trend line will be yields in Canada and the USA.  Lets look at what we know at this time period in 2017:

                        1.)  We know  acres of mustard are down in Canada and the USA.  Most believe 25-30% in Canada and the same

                                in the USA.  One very interesting stat is yellow mustard acres in Canada have been estimate to be down                                         42%.

                         2.)  Saskatchewan seems to be hit the most by  hot temperatures and no moisture.  It is also the heart of the                                                mustard production in Canada.  Alberta has had a little rain but the rains have been deficient also.                                                  Western Manitoba may see the best crops but still can be below trend line.

                          3.)  North Dakota is for the most part a complete disaster.  In a lot of places the plants never emerged at                                                  planting time.  It looks like the lack of moisture and heat this summer will reduce yields in this area.                                              Also, Eastern Montana will be poor quality and way below trend line.

                            4,)  Western Montana and Idaho/Utah have had record heat this summer but we also had very plentiful soil                                        moisture going into to spring.  Idaho irrigates a high percentage of its oilseed's and early yield figures                                           look to be better than last year with premium quality.  Not enough of the dry land has been harvest to                                           see yield trends but those fields that have been harvested have been in the 1200 to 1500 pound range.

                            5.) All three oilseed's in Idaho, safflower, mustard, and flax,  will be good quality with yields trending                                                   average to above average

          Canada has adequate mustard carryover (stocks to use at 85 days), lower acreage, and below trend line yield potential.  This mix of market news could can change the two year bearish attitude in the market .  I do look for brown mustard to be in short supply, yellow mustard to surprise the market and it could move to pipe line supplies for good quality (the carryover supplies that I have seen seem to be all lower quality). and oriental mustard to be the best supply of the three mustard's.

           Flax will trend sideways until mustard decides what price direction it will take then the flax will take the follower role.

           I have not talked about safflower much but harvest is getting close.  Safflower could be the weakest of the bunch.  North Dakota and Eastern Montana are very poor with South Dakota looking to be better but still below trend line yields.  Idaho/Utah crop looks to be variable.  Our fields are either above average or below average with no fields in the middle.  Idaho/Utah will be the main supply in the safflower market for 2017.  I believe prices will change direction from down to up and late in the season we may see shortage.

            Prices for safflower, flax and mustard have been  in a two year decline.  I look for this to change with price swings to the upside.  Two years of decline have helped the processors but hurt the producers.  It is time for the producers to have a break.  Over the last two years grower inputs for machinery and field inputs have increased and their margins are too small to survive long term.  Price declines and a strong American Dollar has taken its toll.  Our dollar is now trending to the weaker side which will help the grower and processors sustain a market correction.

For those who might not know:   I have a new artificial hip and still have about 4-5 weeks of recovery,  and I had to have a cancer lump taken of the end of my nose.  Needless to say i have not stuck my nose into anybodies business lately.  It is healing butvery sore.  This summer has been my worst summer ever.  My 100,000 mile check up has consisted of a new hip, a nose job, new implant teeth  and a cochlear implant.  Not much fun but maybe I am getting close enough to bionic that i will find some advantages.

Hope your harvest is the best it can be and take some time with your family this Falls Season.

July 17, 2017

  June 8, 2017

           The month of May is a good month to remember.  Our weather had all of the above.  We had lots of moisture in the beginning with some warm weather but mostly cooler temperatures..  When it decided to change from the cooler pattern, we experienced temperature in the 90's, then cold, the warm again.  The end of May and beginning of June our weather was more like July than June.  The 10 day forecast shows little precipitation and roller coaster temperatures.  Our planting windows were early April and the first two weeks of May.  We have oilseeds very far advanced to just getting started to grow.  We have mustard in bloom and fields just out of late emergence.  One thing I do know, is when harvest rolls around one of the seeding windows will have the best yields pattern.  The odds say the later seeding will be the best yields but the early seeding did not get hurt with cold weather.

             For most part, insects have been light infestations, some nutrient deficiency has showed up, and some wind damage.  All in all, the growing season might turn out ok.  A June rain certainly would be perfect.

            Acres of oilseeds, safflower, mustard, and flax are up substantially.  The may be down in other areas.  The crop reports will be viewed as market direction.  As soon as I have more data and a better look at our crop, I will update Bill's Corner.

        

January 12, 2017

     The beginning of 2017 is bringing the Idaho's snowpak to above average conditions.  This is needed as the last decades provided just enough water for the lawyers to keep busy year round.  I doubt this scenerio will change but the water users should be better off for the coming year. Idaho is finally having is finally having a good winter.  The ski resorts have smiles this year also.

      Interest in growing oilseeds is at an all time high  level.  We have been spending many hours on marketing and showing success for our efforts.  This coming year prices will be lower on mustard and flax from the 2016 levels and safflower

will remain steady unless acres start to increase as planting season approaches.  Our moistures  levels will be excellent, but more importantly this snow fall and cold weather should reduce the insect population for this coming year.

      Mountain States Oilseeds is working the accommodate the increase interest is growing oilseeds. I will give my opinon: 

I do believe the agricultural markets are in the bottoming phase, so lets get 2017 out of the road to see the rebound in 2018.  I doubt whether the presidential election will have anything to do with the firming of markets but if they do I know who will take credit for the rebound.

      All in all, when compared to the grain markets the oilseeds have hung right in their the last couple of years.  They have been much stronger than grains.  If we look to the future, the flax market will only increase as consumers will buy healthy foods in the future.  This trend will see no decrease.   Mustard's future looks bright also as it uses are increasing and with new hybrid varieties about 4 years away the yields will be increasing to provide product for the increased demand.  Safflower may struggle somewhat to find increasing markets but time will tell.  The history of safflower tells us when increased demand is dead it will find new uses.

       I would like to end this by telling you a very important new fact for Idaho Agriculture:  We now produce about 20 percent of the total mustard supply in the United States.  Southeast Idaho  can become the mustard capital for two reasons:  Supply and world class quality.

      

 

 

 

October 18,2016

      Harvest is over with just a few acres left the harvest.  The wheat crop was above average with prices lowest in decades and discounts for protein and falling number severe.

     Our yellow mustard yields for the most part are increasing each year as we make irrigation changes.  Our dry land yields were excellent too.  Once again our quality continues to be world class with the 2016 crop the best ever.  The growers deserve all the credit as they see growing mustard a very important crop in their future.  Price competition for markets has increased because the Canadian crop yields are excellent this year. I do believe we may see some firmer prices as the new year approaches.

      Our flax yields were recorded setting.  As we adjusted irrigation, we broke the 3000 pound per acre yield figure for the first time.  It does look like under irrigation, growers will be swathing their flax.  When the yields increase so does the maturity and swathing gives us good harvest timing without yield reduction.  Price direction is sideways, but an interesting factor is prices are low enough that the Canadian growers will not sell until prices go up somewhat.  We will see how this plays out.  My opinion is price direction has seen the bottom and will work higher from here.

    Our safflower harvest is over with quality and test weight the best I have ever seen.  We have some test weights as high as 44 pounds per bushel.  The final FSA safflower acre report showed Montana acres down significantly with other states hoovering around normal. Yields have trended near average. Once again, the quality of our S333 will excite the market as well as the bird feeding consumer.  I view price direction as bottomed with prices working firmer to allocate this years safflower.  We are not going to see a bull market,  but probably will not see additional declines.    

     Have a great fall --  Until later, I think I have spread enough BS to feed next years crop through the winter months.

 

.        A month has passed by and what changes have taken place?  The NASS oilseed acres planting report came out and "I had some surprises".  I had a pain in my side so I went to the doctor to see what was wrong.  He ran some tests and said my hip joint was worn out.  I looked at him with disbelief.   He sent me to a specialist and he also confirmed that my hip was shot and I needed the new hip. We scheduled the operation for July 5th.

       I am home taking therapy and finding out that my healing time will be longer than i want it to be. Looks like it will be at least two weeks before they will let me drive.  Anyway i am not to happy right now for two reasons: 1) I am missing the field visit and 2) my golf game is shot for the year.

        To help with my healing time, Mountain States Oilseeds has hired a graduate from BYU Idaho to handle growers relations and food safety issue.  His name is Joseph Hanson.  He is married and has three children.  His uncle is one of our flax and mustard growers for Mountain States Oilseeds.  I would like to welcome Joe and his family and I also am very excited because this is a good fit for MSO.  Joe has a quiet personality and will be a good listener and growers will find him very honest and hard working.

 

      The NASS report came out with the planted acres of mustard, flax and safflower. Much to my surprise mustard and flax acres are down roughly 26% in the USA.  Safflower acres were identical to 2016 planted acres.  Canadian mustard acres are down 25% from a year ago but their flax acres are up.

       Carryover figures were not on the report but here is my best guess.  Mustard carryover (USA&Canada) shows a plentiful increase for the 2016 crop.  It is my belief that a lot of the carryover is not good enough quality for #1. s The mustard growing areas in Canada for the most part have had the same weather pattern as the USA areas with above average temperatures and very little precipitation. The 2017 Canadian mustard crop will not meet trend lines and will use the carryover.  The USA mustard crop does not have carry over and the major production area of North Dakota is very dry.  Adding all the conditions in the USA and Canada, I believe we will see price strength   into the 2018 crop season. 

        Flax acres down in the USA and up in Canada with less than ideal weather will led to a interesting marketing year.  My guess is that we will see some price strength into harvest and sideways at harvest.  Price strength in flax might take until 2018 planting intentions for a major move upward.

        Even though safflower acres are the same as 2016, our weather conditions are not  favorable for trend line 2017 yields.  Carryover in safflower is more than i like to see, but i do see a little glimmer of demand eating into the carryover leading into harvest.  The odds for higher prices in the future for safflower are increasing but could be dashed if the 2017 crop shows better yields than I think are in the cards at this time.

         Overall, I do feel more inclined to see higher prices in the oilseeds over the next 365 days.  The down trend is fading and  loosing it steam and corrections should take place unless ideal weather over a wide growing area takes place.